Internet Games

A group of friends wants to set up a website allowing people to play a certain type of board game online. They will sponsor tournaments on the site and encourage players to place bets on individual games, players and tournaments using a virtual currency with no value in the real world. People can use this virtual currency to pay for their subscriptions to the website, which, eventually, will have an online “store” where people can use their virtual currency to buy goods in the real world, as well as virtual goods.

The group’s attorney is concerned that this may be viewed as Internet gambling, which is illegal. “We did some online research and it seems that the prohibition on Internet gambling applies only to “games of chance,” like roulette or dice games, and not “games of skill,” like the board game we are bringing online. How concerned should we be about this, and how should we set up the website so that it is clear that no “real gambling is taking place?” one group member asks.

First, make sure you have the legal right to bring this board game online. If the game is trademarked or copyrighted, think Monopoly or Risk, you’ll need permission from the board game’s owners to do anything with their game online.

In the United States, the federal Unlawful Internet Gambling Enforce-ment Act of 2006 prohibits businesses from “knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.” Many states have similar laws. Generally, laws prohibiting Internet gambling make a marked distinction between “games of chance” and “games of skill.” While online, betting on “games of chance” is generally prohibited, betting on “games of skill” is often permitted. Neither the 2006 Act nor any U.S. gaming law has defined these terms clearly, and there is currently much confusion about whether particular games — such as baseball, poker or chess — are considered “games of skill” or “games of chance” under these laws.

The 2006 Act defines a bet or wager to include risking something of value on the outcome of a contest, sports event, “or a game subject to chance.” The “game subject to chance” restriction is designed to include Internet poker and other card games. The 2006 Act then confuses the issue of skill by stating that betting includes purchasing an opportunity to win a lottery, which must be predominantly subject to chance. The 2006 Act expressly prohibits lotteries based on sports events. Recent court cases interpreting the 2006 Act have focused on so-called fantasy baseball websites, which allow users to wager thousands of dollars on the performance of professional athletes. While the 2006 Act specifically exempted these websites, because the winners were not determined by the outcome of a single game or the performance of a single player, there is growing concern that daily fantasy games have a fundamentally different relationship to chance than season-long fantasy games. On a given day an injury, a hailstorm or a ball bouncing strangely could affect a result, making daily fantasy games seem very similar to placing a bet with a bookmaker.

Check with a lawyer familiar with gambling law to find out if there are any specific cases dealing with your board game. If there aren’t, ask the attorney to draft a disclaimer and post it both on your website’s home page and in your Terms and Conditions of Service or user’s agreement. The disclaimer should say:

• U.S. laws prohibiting Internet gambling do not provide clear guidance as to what is a “game of chance” versus a “game of skill.”

• You believe your board game is a “game of skill,” and your reasons for believing so.

• If at any time you are advised by legal counsel, or by a government agency, that any activity conducted on your website violates federal or state law, you will cease that activity immediately and refund the players’ virtual currency wagered on a game or tournament.

Include a statement in bold-faced type prohibiting cash wagering on the website, punishable by a one-year banishment from the site, and another statement that online betting, even using virtual currency, may be prohibited by the laws of countries other than the United States. It’s not a perfect solution, but it may be the best you can do until Congress or the courts clarify the scope of the 2006 Act and what it was intended to prohibit.